The Following Information Has Been Condensed from the December 31

question 208

Essay

The following information has been condensed from the December 31 balance sheets of Gabriel Co.: $\begin{array}{l}&\text { Year } 2&\text { Year } 1\\\text { Assets: }\\\text { Current assets } & \$ 825,500 & \$ 674,300 \\\text { Fixed assets (net) } & 1,473,600 & 1,275,300\\\text { Total assets } & \$ 2,299,100 &\$ 1,949,600\\\\\text { Liabilities: }\\\text { Current liabilities } & \$ 313,500 & \$ 309,600 \\\text { Long-term liabilities } & 703,000 & 545,000 \\\text { Total liabilities } & \$ 1,016,500 & \$ 854,600 \\\text { Stockhol ders' equity } & \$ 1,282,600 & \$ 1,095 ,000\\\text { Total liabilities and }\\\text { stockholders' equity }&\$2,299,100&\$1,949,600\end{array}$ ​ (a) Determine the ratio of fixed assets to long-term liabilities for each year.
(b) Determine the ratio of liabilities to stockholders' equity for each year.
(c) Comment on the year-to-year changes for both ratios. Round your answers to two decimal places.

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Definitions:

Monetary System

A structured system for creating, managing, and distributing money in an economy.

Barter Economy

An economic system in which goods and services are exchanged directly for other goods and services without the use of money.

Efficient Price

A market condition where prices reflect all available information and resources are allocated to their most valuable use.

Efficient Quantity

The level of output where the marginal benefit to consumers equals the marginal cost of producing an additional unit, leading to optimal resource allocation.